In an interview with Fortune in June, Zenefits co-founder Parker Conrad didn’t mince words when asked about what he thought of insurance brokers’ future in the industry. “They’re f*cked,” he said.
Prior to that, speaking at Tech Crunch in 2013, the outspoken CEO said Zenefits is going to drink insurance brokers’ “milkshakes” because they do “10 times as much for their clients as insurance brokers do.”
Since Zenefits launched in 2013 there has been countless articles about how they are shaking up the industry and how they are scaring the hell out of insurance brokers. They shouldn’t be. I know I’m not, and I certainly don’t view Parker Conrad as Darth Vader as he claims many other insurance brokers refer to him as. Darth Vader is much more charming.
Kidding.
Seriously though, I actually admire Parker Conrad and welcome what Zenefits is bringing to the industry. Competition is good, especially for the consumer. Plus, as a 26 year old millennial, I love that they are introducing technology to an industry notorious for lagging severely behind other industries.
Of course, it’s not my admiration of the free market and affinity for technology that assuages any concern I may have over Zenefits shaking up my industry. They are also right about two key points: companies want their insurance broker to provide more services and better technology.
That's why earlier this month the company I work for, Connor & Gallagher, officially added payroll and HR expertise by acquiring OneSource HR, a Payroll and HR technology company that provides the all-in-one HR solution that Zenefits has been touting.
Now, Connor & Gallagher is unique in that provides benefits expertise, property & casualty expertise, and payroll expertise in house. Additionally we can provide the all-in-one HR Technology that integrates employment-related functions and simplifies ACA reporting.
This dynamic differs from Zenefits in that Zenefits’ self-described “hub and spoke” business model, the software is the hub, the main product they are selling. The customer’s employee benefits plan are one of the spokes. Hence why they are referred to as a software company, albeit a software company that handles benefits.
As I said, we agree with Zenefits that customers want better technology from the industry, but we also believe that customers would rather a company view their employee benefits program as the hub and HR software as the spokes. In other words, we think the idea of working with a benefits company that offers HR Technology is more valuable that working with a technology company that also does benefits.
With Connor & Gallagher, customers are going to see their benefits expert face to face consistently throughout the year. As a broker we take the time to meet with customers and work to gain an understanding of their company culture so that we can implement cost control measures that will realistically work for their particular business. Then we help establish a plan design strategy for the next five years so that their business can save money long term. Part of this five year plan design includes meeting with not just company executive, but also lower level employees, and educating them on how to become better consumers of insurance, which is critical for controlling costs.
This is what’s called the strategic part of HR, which Zenefits claims only makes up 20% of HR. Even if that’s true, it’s the 20% that directly affects your costs. Customers considering Zenefits need to ask themselves if they really want to outsource 20% they want to outsource to a service center model. At Zenefits, the strategic part falls under the responsibility of someone sitting in a cubicle in San Francisco with a calls queue. Likewise when for when companies need someone to go to bat for you when you’re fighting with the insurance company, and when it comes time to negotiating your renewals.
Connor & Gallagher has found a solution that gives companies the HR technology that rids all the headaches associated with the administrative aspects of HR, allowing our customers to manage their payroll, benefits, onboarding, compliance, 401k and more through a single dashboard without forcing them to sacrifice the value of having a close relationship.
In other words, customers can have their cake and eat it too. They can have cutting-edge HR technology rids them of the administrative headaches, but also get the face-to-face and hands on service that helps them contain costs.
